SAN FRANCISCO--A speedy launch of an iTunes cloud music service hasn't materialized the way many at the large record companies expected.

After Apple acquired Lala.com last December, the thinking among some music insiders was that Lala's streaming-music technology could easily be plugged into iTunes--once Apple obtained the proper music licenses. Lala.com, a music service launched in 2006 and shut down by Apple last May, possessed technology that scanned hard drives for existing music libraries and then enabled users to play back the same songs from Lala's servers via Web-connected devices.

But eight months after the acquisition, Apple is telling executives at the four top labels that if Apple offers any cloud music features within the next few months, they will likely be "modest in scope" and not include the kind of functionality that Apple outlined in meetings with the labels, such as storing users' music on its servers, sources told CNET. They added that Apple still hasn't negotiated the kind of licensing deals it would need to distribute music from the cloud.

An Apple spokesman declined to comment.

What's holding things up isn't totally clear, but it certainly hasn't helped that for most of the time since the acquisition, the Lala team has worked on an undisclosed video feature instead of music, and that Apple managers, even Eddy Cue, who runs Apple's Internet division and headed iTunes for years, took a long time to specify what he wanted from the Lala guys, the sources said. Cue is close to Lala founder Bill Nguyen and was Lala's top booster within Apple.

Apple told Lala executives that they would receive "key positions helping shape music strategy for the iTunes Store," The Wall Street Journal reported soon after the acquisition became public. At the time, some label managers questioned whether Lala's outspoken management, especially press-friendly Nguyen, would fit in at Apple, famous for fostering an atmosphere of absolute secrecy.

The situation with the former Lala management team is hazier now. Two music industry sources said Monday that one of Lala's four founding members, someone who moved to Apple after the acquisition, has recently left the company. The sources didn't know whether this would affect Apple's cloud plans.

Delays launching a cloud music service might disappoint some iTunes users, but if Apple is focusing resources on a cloud video service it could be welcomed by those who have maxed out hard drives with films and TV shows. Sources at the major film studios have said this year that Apple plans to create "digital shelves" that enable iTunes users to store movies and other media on Apple's servers.

Another puzzle piece that appears to be falling into place is the server farm Apple is building in North Carolina. Apple executives said last month following their most recent earnings report that the facility, which some have begun calling "the Orchard," is on schedule to be completed by the end of the year. Many in the media have speculated these servers will be the backbone for Apple's cloud services.

Cloud storage could help overcome one of the roadblocks confronting Apple's top gadgets. The iPad, iPod, and iPhone all have limited ability to store the films, e-books, apps, and songs Apple wants to sell owners of these devices. The cloud could help make hard drives irrelevant and help users avoid losing content that can occur when hard drives malfunction.

No need to panic
The news of Apple's slow-moving cloud comes as Google's competing service appears to be zooming along. The search engine has recently hired Elizabeth Moody, an attorney with deep experience negotiating digital-music deals. Record executives expect Moody will help cut the first cloud music licensing agreement. Google has told label managers that it wants to launch a music service this year.

If Apple doesn't appear to have the same urgency about racing Google into the cloud, it may be that Apple knows Google has a long way to go before it can seriously mount a challenge in music. Apple's iTunes is the country's largest music retailer, online or off.

Google's motivation to become a music merchant appears to be driven by its smartphone interests. The search engine's Android operating system has won favorable reviews powering Sprint's Evo and Motorola's Droid, and research shows Android is a serious iPhone competitor. Google now appears intent on supplying owners of these handhelds with plenty of content.

Fans of Google and Apple should remember that these companies move at their own pace. Google has a history in music of quickly switching directions when it comes to music. The company has signaled several times in the past it would launch music services only to change its plans or put them on hold indefinitely. An example of this was OneBox, an attempt by Google to offer streaming music or downloads with the help of third-party vendors to people who keyed music terms into the search engine. According to music sources, Google had given the impression that OneBox would be a much bigger product than it eventually became.

However, Google's music attempts have never appeared this concrete before, said the music sources. So who knows?

What has raised some questions at the labels is that so far, Moody, Google's new music attorney, hasn't been involved in any of the search engine's meetings with the labels. Talks have mostly been handled by Andy Rubin, Google's Android overseer, and Zahavah Levine, a YouTube attorney recently tasked with helping out on the new music service.

As for whether consumers even want cloud media, Mike McGuire, an analyst with Gartner said: "The cloud is the future, but this is going to be a multi-year play. This isn't about keeping Wall Street happy this quarter or the next. This will play out over decades and companies like Google and Apple are building the foundation."

For people who prefer to own their music and films, owning a lifetime license for the media they buy is bound to be an attractive proposition. No more losing a music or video collection when a laptop is stolen or suffers a meltdown. I recently downloaded books I purchased from Amazon onto my new Sprint Evo. I originally bought the books for my lost iPhone 3G. I downloaded copies of the same books at no extra charge.

Not having to pay to replace those books and being able to access them from Amazon's servers via multiple Web-connected devices is very, very nice. I'd love to be able to do that with my iTunes music and movies.

About the author

Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
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